Correlation Between US Treasury and First Advantage
Can any of the company-specific risk be diversified away by investing in both US Treasury and First Advantage at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining US Treasury and First Advantage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Treasury 30 and First Advantage Corp, you can compare the effects of market volatilities on US Treasury and First Advantage and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in US Treasury with a short position of First Advantage. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Treasury and First Advantage.
Diversification Opportunities for US Treasury and First Advantage
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between UTHY and First is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding US Treasury 30 and First Advantage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Advantage Corp and US Treasury is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on US Treasury 30 are associated (or correlated) with First Advantage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Advantage Corp has no effect on the direction of US Treasury i.e., US Treasury and First Advantage go up and down completely randomly.
Pair Corralation between US Treasury and First Advantage
Given the investment horizon of 90 days US Treasury 30 is expected to under-perform the First Advantage. But the etf apears to be less risky and, when comparing its historical volatility, US Treasury 30 is 1.79 times less risky than First Advantage. The etf trades about -0.01 of its potential returns per unit of risk. The First Advantage Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,208 in First Advantage Corp on August 29, 2024 and sell it today you would earn a total of 720.00 from holding First Advantage Corp or generate 59.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 85.28% |
| Values | Daily Returns |
US Treasury 30 vs. First Advantage Corp
Performance |
| Timeline |
| US Treasury 30 |
| First Advantage Corp |
US Treasury and First Advantage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Treasury and First Advantage
The main advantage of trading using opposite US Treasury and First Advantage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Treasury position performs unexpectedly, First Advantage can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in First Advantage will offset losses from the drop in First Advantage's long position.| US Treasury vs. US Treasury 20 | US Treasury vs. US Treasury 5 | US Treasury vs. US Treasury 3 | US Treasury vs. Rbb Fund |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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